Amazon

Thursday, October 18, 2012

Three Former Financial Services Executives Sentenced to Serve Time in Prison for Roles in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds

WASHINGTON – Three former financial services executives were sentenced
today in U.S. District Court for the Southern District of New York, for
their participation in conspiracies related to bidding for contracts for
the investment of municipal bond proceeds and other municipal finance
contracts, the Department of Justice announced. The three former
executives were convicted after a three week trial on May 11, 2012.

Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all former
executives of General Electric Co. (GE) affiliates, were sentenced by
District Court Judge Harold Baer Jr. for their roles in the
conspiracies. Carollo was sentenced to serve 36 months in prison and to
pay a $50,000 criminal fine. Goldberg was sentenced to serve 48 months
in prison and to pay a $90,000 criminal fine. Grimm was sentenced to
serve 36 months in prison and to pay a $50,000 criminal fine.

“By manipulating the competitive bidding process, the conspirators
cheated cities and towns out of money for important public works
projects,” said Scott D. Hammond, Deputy Assistant Attorney General for
the Antitrust Division’s criminal enforcement program. “The division
and its law enforcement partners remain committed to rooting out such
corruption.”

According to evidence presented at trial, while employed at GE
affiliates, Carollo, Goldberg and Grimm participated in separate fraud
conspiracies with various financial institutions and insurance companies
and their representatives from as early as 1999 until 2006. These
institutions and companies, or “providers,” offered a type of contract,
known as an investment agreement, to state, county and local governments
and agencies throughout the United States. The public entities were
seeking to invest money from a variety of sources, primarily the
proceeds of municipal bonds that they had issued to raise money for,
among other things, public projects. Goldberg also participated in the
conspiracies while employed at Financial Security Assurance Capital
Management Services LLC.

At trial, the Department of Justice asserted that Carollo, Goldberg,
Grimm and their co-conspirators corrupted the bidding process for dozens
of investment agreements to increase the number and profitability of
investment agreements awarded to the provider companies where they were
employed. Carollo, Goldberg and Grimm deprived the municipalities of
competitive interest rates for the investment of tax-exempt bond
proceeds that were to be used by municipalities for various public works
projects, such as for building or repairing schools, hospitals and
roads. Evidence at trial established that they cost municipalities
around the country millions of dollars.

“Today’s sentencing of Carollo, Goldberg and Grimm for their involvement
manipulating a competitive bidding process of public contracts is the
final step in a case that demonstrates the FBI’s commitment to
investigate and prosecute those who illegally influence the financial
markets for their own profit,” said Mary E. Galligan, Acting Assistant
Special Agent Charge of the FBI in New York. “The co-conspirators
scheme over many years deprived municipalities across the country of
competitive interest rates on bonds, a yield that most cities would say
they greatly need. The FBI will continue to work with our law
enforcement partners to enforce the laws that protect our financial
markets.”

"The sentences handed down today send a clear message that crime
motivated by outright greed will land you in jail,” said Richard Weber,
Chief, Internal Revenue Service – Criminal Investigation (IRS-CI).
“Quite simply, the defendants stole money from taxpayers and conspired
to manipulate the competitive bidding system to benefit themselves
instead of the towns and cities that needed this money for important
public works projects. IRS Criminal Investigation is committed to
working with our law enforcement partners to uncover this kind of
corruption and secure justice for American taxpayers.”

Carollo was found guilty on two counts of conspiracy to commit wire
fraud and defraud the United States, Goldberg was found guilty on four
counts of conspiracy to commit wire fraud and defraud the United States
and Grimm was found guilty on three counts of conspiracy to commit wire
fraud and defraud the United States.

A total of 20 individuals have been charged as a result of the
department’s ongoing municipal bonds investigation. Including today’s
convictions, a total of 19 individuals have been convicted or pleaded
guilty, and one awaits trial. Additionally, one company has pleaded
guilty.

The sentences announced today resulted from an ongoing investigation
conducted by the Antitrust Division’s New York Office, the FBI and the
IRS-CI. The division is coordinating its investigation with the U.S.
Securities and Exchange Commission, the Office of the Comptroller of the
Currency and the Federal Reserve Bank of New York.